Speaking at a recent Pension Playpen event, Andrew Cheseldine, the SPCG’s Chairman, called on the pension industry to take the matter of small pension pots more seriously. According to the pension expert, pension savers across the country could unknowingly see £54 billion accumulate in small and deferred pension pots by 2035. SPCG estimates there are currently three million deferred pension savers who have invested in default options with small pot sizes of only £100.
Overall, there is a total of £10.5 million with deferred pot sizes under £1000 in the UK, according to the SPCG.
Experts estimate that around one million of these pension holders are no longer residents in the UK, resulting in that money being stuck for the near future.
At the Pension Playpen event, Mr Cheseldine outlined why the pension industry needs to do more to educate savers regarding the issue of small pots.
The pension expert said: “It is astonishing to think that millions of pounds are sitting in pensions that are possibly forgotten about or inaccessible for one reason or another.
“The detriment to pension savers’ futures is immeasurable, the scale of resources wasted by pension companies that could be put to better use is huge.
“It is a systematic problem for the industry, and a tragedy that so many people will lose track of their pensions.”
“There are options for people who are aware they have a ‘small pot’, such as consolidation or taking a cash lump sum, although all options come with certain restrictions and requirements.
“That also assumes that people have not forgotten about a pension they may have – many people have multiple small pots built up over long careers that are all too easy to lose track of.
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Steve Goddard, CEO of Pension Playpen, has called for greater collaboration between the Government and the financial services industry to improve the accessibility of pension pots in the future.
Mr Goddard said: “Where do we go from here? Its not a new issue and as an industry we have tried before.
“We hope the momentum Andrew has built around the issue will be the push we need.
“Swift decision in terms of the industry and government deciding what to do legislatively to compel people to take action is critical, for in the meantime small pots are being eroded through charges.
“Whether provider or member driven or laid down in new regulation, something must finally be done to protect pensions savings, alert and assist people in taking positive action to make their small pots work better for them.”
A deferred pension is the title given to a pension which someone delays from taking money from until later in their life.
The more a pension holder waits before accessing their own savings, the higher their potential retirement income could end up being.
Many people choose to have a deferred pension as means of boosting their savings and planning for retirement.
It is possible to defer getting money from your state pension by waiting for a period of time before beginning to claim it.
Anyone concerned about old pension pots which they are looking to access are encouraged to contact PensionWise.
PensionWise is a Government-funded service which offers free and unbiased advice about your pension options.
Express.co.uk has reached out to the Department for Work and Pensions (DWP) for comment.Internet Explorer Channel Network